There are increasingly licensing and subscription optimization challenges in Microsoft transactions, as well as new cost, flexibility and licensing/subscription opportunities you can capitalize on. As Microsoft continues to make a transformation and business demands and usage requirements are changing rapidly, customers should prepare for a more demanding purchasing and supplier management environment. When signing the agreement, the customer must define and communicate to Microsoft the number of desktop computers or qualified users as well as Microsoft Enterprise products or Enterprise Online Services. This information represents the first purchase. Each anniversary is due to a “True Up Order” for additional desktops or qualified users, based on which the total cost for the previous year is calculated. Under a traditional agreement on microsoft Enterprise, the customer is allowed to authorize corporate products individually or as a standard platform. However, at least one enterprise product must be standardized throughout the company. Microsoft`s mission is to transfer its customers within the traditional on-premise software company to its subscription-based cloud services. Revenue from its cloud commercial offerings is growing strongly, while traditional software sales are declining and the mix is weighing on Microsoft`s ability to support a multi-faceted business. Microsoft`s success will be measured against the success of this mission, and customers will be under increased pressure to travel to the cloud or to pay for on-prime-price solutions through increased contract and price complexity. Most customers have managed the jump to 365 and are experimenting with azure.
The good news is that the window of agreement for new cloud editions with Microsoft is still open. All products that are not on your EA must already be purchased when they are implemented. As with the true-up, these purchases are made as a lump sum payment for the rest of the contract (unless negotiated otherwise), but do not wait for the annual true-up process. Sometimes you will meet a seller who encourages you to buy a quantity of 1 of a future product that you want to use so that you can make a true-up for that product. Don`t fall into that trap! Too often, it simply means that you pay money for a product that you can never use with very little use. As a public company, Microsoft`s mission is to accurately predict revenue. To do this, the company must have a clear overview of its sales pipeline and be able to close purchases and renewals faster and earlier in the quarterly sales cycle. There are a limited number of legal resources and license desks to process these transactions, and it is almost impossible to process paperwork less than two weeks before a calendar year, fiscal year or end of the quarter. Managing these largest volumes in deal volume is a challenge for Microsoft`s operations, and delays in this pipeline can have a domino effect on quarterly and annual revenue, share price and overall market perception. Customers should use the supplier`s desire to prevent purchases and extension periods accordingly.